China's Paper Gold Ban Fails to Dent Global Market

China's recent ban on retail trading of paper gold has had a muted impact on global market liquidity, according to YLG Bullion & Futures. The move, which began in late 2020 and was fully implemented on July 24, 2026, aims to reduce systemic financial risks and curb excessive speculation by shifting liquidity towards physical gold holdings.

YLG chief executive Tipa Nawawattanasub said the policy reflects Beijing's efforts to strengthen economic stability. The measure has prompted some retail investors and speculators to unwind their paper gold positions, contributing to modest short-term volatility in global gold prices.

However, the policy is unlikely to have a significant effect on the broader gold market, as trading conducted through affected banking intermediaries accounted for only 4.88% of total Shanghai Gold Exchange (SGE) gold trading volume in June.